Starz Sale Would Be Another Killer Deal For John Malone

John Malone, the chairman of Liberty Media Corp (NASDAQ:LMCA) may achieve another winning deal with the sale of Starz (NASDAQ:STRZA), the pay-television channel controlled by the billionaire entrepreneur.

Potential buyers

Last week, the New York Post reported that Starz (NASDAQ:STRZA) is exploring the possibility of selling itself for $5 billion. The report indicated CBS Corporation (NYSE:CBS) and Lions Gate Entertainment Corp (USA) (NYSE:LGF) are interested to acquire Malone’s pay-television channel.

According to the report, Starz (NASDAQ:STRZA) is in the early stage of discussions with the companies. Sources suggested that the negotiations may not just a straight sale but may also include strategic alignment or asset swaps.

There had been reports that Twenty-Fist Century Fox Inc (NASDAQ:FOX) also met with the management of Starz (NASDAQ:STRZA), but people familiar with the situation said the meeting was a courtesy call. Bloomberg previously reported that Starz hired Lion Tree advisors engage with prospective buyers.

Liberty Media Corp (NASDAQ:LMCA) completed the spin off of the pay-television channel last year. Malone controls 49% of Starz (NASDAQ:STRZA), which has $3.3 billion in market capitalization.

Interests to acquire Starz (NASDAQ:STRZA) was boosted by the recent announcement of HBO and Showtime to offer standalone internet-based services next year. Consumers are becoming increasingly interested to have standalone options instead of paying for 100-plus bundled channels offered by cable and satellite-TV providers.

In a telephone interview with Chris Ciaccia of TheStreet, Shahid Khan, co-founder of Mediamorph, a software and data provider for the media industry commented, “The whole business model that Starz has, suddenly has more legs than before. By making Starz an over-the-top service, it effectively will compete less with HBO’s broadband player than with Netflix, and that’s not even baked into the stock’s current valuation.”

Starz chairman previously confirmed the company is for sale

During an interview with CNBC last week, Gregory Maffei, chairman of Starz (NASDAQ:STRZA) confirmed reports that the company is for sale. According to him, it will be more beneficial for the network to be owned by a media company that operates other cable channels.

Maffei also stated, “Starz is in an enviable position. More and more of its value is coming from original programming … and that creates a lot of opportunity as well by increasing amounts of channels that they can distribute that content through.”

The shares of Starz (NASDAQ:STRZA) closed $32.98 per share, up by more than 2% on Monday. Over the past 52 weeks, the stock price of the company traded from $26.38 to as much as $34.20 per share.